The funding will support Front End Engineering and Design studies, which will enable the bidders to further their designs for the projects at Kingsnorth and Longannet respectively. These studies involve detailed engineering and design work and will be completed within twelve months, after which the final competition winner will be selected.

This is one of the first set of studies of end-to-end commercial scale CCS on coal power plant in the world and will be used by project developers to examine and refine initial plans and reduce technical risk, so that more detailed project plans can be drawn-up and costed.

Energy and Climate Change Secretary Ed Miliband said:

"These two promising projects are at the forefront of the UK's efforts to build one of the first commercial-scale clean coal plants in the world.

"The award of design-stage funding demonstrates our commitment to this breakthrough technology. It has the potential to support tens of thousands of jobs and bring billions into the economy.

"CCS is the only technology that tackles carbon emissions from fossil fuel power stations, and given the world's dependence on coal, is a vital technology to securing the world's future energy needs and tackling climate change."

ScottishPower's Chief Executive, Nick Horler said:

"We are delighted to have been selected for the next critical stage of the government's competition.

"The real work of finally making CCS a commercial reality begins today as this funding will now enable ScottishPower to take the technology from concept to design stage. It will tell us exactly what we need to know so that we can quickly build this new and essential technology.

"It also puts the UK back at the head of the pack when it comes to delivering full-scale commercial CCS on a global stage."

E.ON UK's Chief Executive Dr Paul Golby, said:

"This is excellent news for the development of clean coal in the UK coming as it does hard on the heels of our announcement about our scoping application for the Kingsnorth CO2 pipeline last week.

"It's absolutely vital that we get CCS right and it's especially heartening to see that we're getting some real movement here in the UK now.

"We should always remember that the long game with CCS is not just about Kingsnorth, it's about a worldwide battle against climate change."

The funding is drawn from a pot of £90 million announced in the 2009 Budget. The precise amounts awarded to E.ON and ScottishPower are commercially confidential.

The UK has the most ambitious commitments on coal generation and CCS in the world. A Bill currently being considered by Parliament introduces a first-of-a-kind levy to support four CCS demonstrations in the UK. The Government will launch a competitive process for the three other projects by the end of 2010, provided the levy is passed.